All the Fun of the Fare
Airlines & fairground operators have much in common, but airlines can learn from the rides & slides
Midsummer is here and for geordies like me that means only one thing – The Hoppings. The world’s largest travelling fair (pictured) has been coming to Newcastle in the north east of England since medieval times. It starts on the last Friday before midsummer’s day and finishes the first Saturday after it.
Popular with an odd mix of teenagers too young to buy tabs and booze, party animal gadgies in Hawaiian shirts and your favourite airline revenue economist, the smart set consider the annual shindig rather low brow and head to the horse races instead.
Big rides whizz, zoom and swirl. Bonny lights and loud music flood the town moor with life and scare the freemens’ famous cows. The smell of frying onions is everywhere.
Rather ominously, a shooting range notes “beware of rebounds” and fast spinning rides like the Sea Storm, my favourite, state “crying is not an emergency”.
Girls scream. Toddlers ride on Fireman Sam’s engine or Postman Pat’s van. Canny lads pretend they are too cool for school and wear shades at nine o’clock in the evening.
Everyone’s legs wobble as they get off Turner’s, Clark’s or Codana’s waltzer. Dodgems bump. Bungees shoot people off high into the air. The whole thing is absolutely mint!
It turns out that airlines and The Hoppings have much in common. But there are also a few things that ride and slide owners do which airlines can learn from. Read on to find out more…
Both airlines and rides at The Hoppings are capital intensive fuel burners with a safety focus
Aircraft are complex machines with a wide range of complex parts and processes. They burn copious amounts of fuel. Fairground rides are the same.
Whether passengers are flying on a plane or the big wheel safety is critical – regulators watch airlines carefully and fairground operators have their own safety agency, ADIPS. Airlines cannot argue that they are special because of their safety culture, operators at The Hoppings have one too.
Both rides and planes burn fuel too and since strength is vital to support some of the rides the parts can be quite chunky and so heavy to lift. Fuel will be an important cost component in both industries.
It is true that aircraft are several orders of magnitude more complex than the rides at The Hoppings, but then the amounts people pay to ride are several orders of magnitude higher too. A ride on the Miami Trip costs £5, a flight to the real Miami £500.
As the Hoppings rides get bigger and more complex so do the fares. A leap into the air on the reverse bungee slingshot costs £16 and £1,600 seems about right for a business class flight to Miami in a big and complex seat.
I would be prepared to wager that the ratio of operational complexity and cost to income is similar across both airlines and funfairs.
Ancient technology lives on
Some of the rides at The Hoppings are of substantial pedigree. The cakewalk, helter skelter and merry go round have probably been going since Victorian times. Dodgems, can be seen in pictures from the 1960s like the one below. Ghost trains and funhouses were well established when I was little.
At the same time that funfairs were rolling out the dodgems, airlines were installing the first computer reservation systems (CRS) like Pan Am’s PANAMAC and Delta’s DATAS. These helped store bookings and sell tickets. These systems were enhanced over the next few decades, as was the fairground experience.
Sixty years later fairground goers are still bumping cars into each other and airlines are still using CRS. Today’s fairground experience is influenced by the 1960s legacy and today’s airline booking, reservation and revenue generating mechanics are too.
A family business & a career on the move for life
Many fairground rides are operated by children of the original owners – I was at junior school with a Codona of Codona’s waltzers.
Go to an airline’s technical building and it will not be hard to find a pilot whose father was an aviator too, often with the same airline. For this reason my social media feed sometimes seems full of people saying ‘jet fuel runs in my veins’ or similar.
Certainly airlines and fairground operations both require specialist knowledge and training, rarely recruiting from outside. Frequently people join the industry for life.
It takes a significant amount of effort and emotional attachment to either attract people to your waltzer year after year or master the Passenger Air Tariff. Both professions require mobility too – travelling fairs and airlines are both by definition highly mobile organisations.
Demand management & dynamic pricing is the name of the game, with pressure on prices in the long term
On Saturday night a ride on the Miami Trip was £5 (mentioned earlier). But the same ride was priced at £3 on the much less busy opening night. Hoppings rides have an easy price adjustment mechanic – they simply replace one sign displaying the price with another! NDC eat your heart out…
But it is not all plain sailing and there does seem to be some pressure on prices over the long term. On opening night 1993 the Terminator charged £5 a ride and was full every time. This year the same ride, now rebranded the Top Spin, was charging £3 and was not always full.
Airlines are famously under the same pressure – one seat in one tube seems remarkably similar to another seat in another tube, especially at the time of purchase.
Both airlines and fairground rides are homogeneous products in a crowded marketplace. Both businesses address this challenge by focusing on branding.
Lufthansa’s boring blue livery is the colour of indecision – the only colour that everyone could agree on. easyJet’s jazzy orange is vibrant and stands out. Ride operators paint their attractions in many different exciting colours. Flashing lights and loud music fill the fairground with excitement.
Images of hunky lads and gorgeous girls often feature. This is how the teenagers buying tickets for the rides see themselves. Like airlines, fairground rides are also promoting a glamourous and far from the ordinary lifestyle. Both industries provide escapism.
Different approaches #1 – centralised vs siloised approaches
One area where airlines can learn from ride owners at The Hoppings is in the decision-making structure. Since rides are small-ish family businesses it is extremely clear who takes the decisions – normally the business owner. Airlines however often have disjointed and highly siloised organisations with no clear decision-making process.
Ricardo has written about how enterprise-level artificial intelligence can be used to design better organisations (see article) but regardless of how sophisticated an organisation’s design is, if staff are not enabled to make decisions nothing will ever get done.
This is not to say that the top-down micro-management style which Qatar Airways is famous for is required. Simple things like allowing any Vice President, who should be senior enough to be trusted, to spend $1,000 (£760) no questions asked to solve a problem can make a big difference.
This approach is not unknown in hospitality. At Ritz Carlton ANY employee can spend up to $2,000 (£1,520) to solve a guest’s problem.
When I recommended such a strategy as part of my review of the procurement policy at Qatar Airways (my last piece of work for the airline, assigned after I resigned – nobody else was brave enough to do it…), this created a bit of a hoo-hah when it really should not have done.
Different approaches #2 – agility & a sense of urgency
The same is not true in the rides and slides business. As small enterprises their cash position is dependent on their sales and they frequently do not have significant assets to borrow against. This means that as The Hoppings is set up and the rides constructed you can sense the urgency in the air. The same is not true at IATA events and other industry blowouts, but it should be.
Some airlines take years to make decisions, if they ever make them at all. I have been warned of some airlines who take more than a year to settle invoices – with that in mind I will not be working with those carriers any time soon, even if they asked…
Different approaches #3 – a personal stakeholding
A key reason why operators at The Hoppings innovate and try new things is that their managers have a personal stakeholding. If they fail the business fails and vice-versa.
The same is not true at airlines and you can tell this when you go to industry events. Of course airlines are full of talented staff who want to do a good job, but since there is often no reward for exceptional vs average performance that good job is often only good enough.
In revenue generating departments there are two paths to exceptional performance. First is a bonus culture like in the financial services industry. This approach is known to facilitate high revenue growth but often comes with high personal costs to employees in terms of their wellbeing from long hours at work and high pressure to perform. It may also be vulnerable to nepotism and corruption.
A second approach is to establish new career paths for talented analysts and mangers that entail high analytical competence and leadership-level pay grades but do not involve managing people (see article). I call these jobs “revenue engineering”. Building these career paths means that although the potential rewards are not as stellar as under the bonus system employees have an incentive to go the extra mile and work-life balance is retained.
Conclusion
Airlines need to develop a more agile approach. Their branding should be engaging, not boring. High fuel costs and a safety culture are not an excuse for poor performance on the revenue generating side of the business.
I work with airlines and airline suppliers to help them develop their business, try new things, build organisations and make innovation possible. Please get in touch to set up a chat about how I can help you.
oliver AT ransonpricing DOT com